Wednesday, December 30, 2015

A Review Of 2015


Today’s newsletter is more of a state of the union for the housing market and overall economic review now that the year is coming to a close.

For starters home values for 2015 will have appreciated approximately 5.4 – 6.3% depending on which index you focus on.  The Case-Shiller Home Value Index shows that home prices in the 20 major cities in the United States are up 5.4% from the same time last year.  The FHFA Housing Index indicates that home prices are up 6.3 percent from the same time last year.  This index measure single family sales.

Overall price appreciation seems to be heating up as of late as housing inventory continues to remain tight.  The exciting news for 2016 is that many analysts along with Fannie Mae, Freddie Mac, and the National Association of Realtors, all seem to be in agreement that purchase volume should increase in 2016.  More home sellers are expected to place their homes on the market now that more people are in positive equity positions than a year ago.

Mortgage rates, despite the Fed’s recent increase of 1/4%, have remained virtually unchanged.  Low mortgage rates will continue to make home ownership affordable.  It has been a while since we have seen this, but recently a number of articles have been written about how homeownership remains more affordable than renting in many areas.  This can be a catalyst to bring more first time buyers into the market.

The biggest challenge to many first time homebuyers is the ability to save for a down payment.  The good news is that more and more we are seeing the return of low down payment mortgage programs which will reduce at least one barrier to entry for home purchasers.

Student debt continues to remain a challenge for Millennials and even though the down payment requirements are dropping, affording student debt payments along with a mortgage can may prove problematic for some first time buyers.

The labor market, despite all of the celebration about low unemployment, remains challenging for college graduates.  The level of underemployment for graduates for the last 2 years remains very high.  There are plenty of low wage jobs available however graduates attempting to enter the workforce on a career path are finding landing that first job quite tough.

Consumer confidence appears to be on the upswing finishing out the year.  Although the official holiday sales numbers are not out yet, some early reports from the credit card companies indicate a vast improvement in sales from last year.  Mastercard reported that they have seen retail sales jump 7.9 percent from last year.  It is expected that Visa and American Express will show similar increases. 

The biggest challenge facing retail is what the future holds for brick and mortar retailers.  Online shopping has exploded this year and the retail stores are seeing a significant decline in foot traffic.  This has been a trend over the last few years however 2015 appears to show a more dramatic decline.

Next week begins business for 2016.  I look forward to keeping you abreast of all that is happening.

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Sunday, December 27, 2015

Purchase, Refi Apps Both up Ahead of Holiday Season


There was, as expected only a minimal immediate impact on either mortgage rates or mortgage application volume in the few days following the Federal Open Market Committee's (FOMC's) long anticipated action hiking the fed fund rate. Rates were up slightly for fixed rate products but applications for both purchases and refinanced increased from the previous week.

The Mortgage Bankers Association's (MBA's) Market Composite Index, a measure of application volume, rose 7.3 percent on a seasonally adjusted basis during the week ended December 18 compared to the volume during the week ended December 11. On an unadjusted basis the index rose 7.0 percent.

There were gains for both refinancing and purchase applications with the former rising 11 percent and the latterup 4 percent from the previous week on a seasonally adjusted basis. The Purchase Index was 2 percent higher on an unadjusted basis week-over-week and 37 percent higher than during the same week in 2014. Read On....

Wednesday, December 23, 2015

2015 Johnson Family Dubstep Christmas Light Show



Started in 2013, our show is not your traditional light show! There are no inflatables, characters, blow molds, or other "traditional" elements. Even the music is not traditional Christmas music; it is a custom sound track composed of Dubstep, EDM, hip hop, movie clips and even our children! The result is an exciting show that feels like a dance party! Even the lights are not traditional, we use Pixels which are similar to what you would see in a stadium Jumbotron. Each pixel can be controlled individually and set to any color and intensity. This means many more effects than what can be done with Christmas lights! The show embodies the spirit of DIY and cutting edge technology with all custom built elements, kit based controllers, and both custom and open source software. We hope you like our show, thanks for visiting!

Friday, December 18, 2015

Interest Rates Rise For The First Time In 9 Years


By now you have heard that the Fed has raised interest rates for the first time in over 9 years.  The Fed, as do so many analysts and experts, believe that the economy is finally strong enough to begin the very slow journey to return to a more normal monetary policy.  The stock market reacted positively to this news and the reality is that everyone expected the interest rate increase to occur in December.

The nation’s biggest banks did not waste any time in taking a deliberate step to alienate their clients.  Within minutes of the Fed’s rate announcement, the big banks moved very quickly to increase their prime lending rate by the same .25 basis points that the Fed raised their rates.  However, the alienating part is that the banks were very quick to let their customers know that they would NOT be increasing the interest rates they pay depositors. Simply put, the banks are now earning an additional ¼% on all of the home equity loans, as well as any other loans tied to prime rate, but their cost of doing business did not change a single cent.  The increase in interest rate without returning anything to depositors is pure profit with zero expense.  That is an extra ¼% on trillions (with a T) of dollars in extra profit.

In the housing market builders are reporting strong growth however they are noticing a slowing in activity.  The weakness in this sector seems to be that the national real estate market is light on first time buyers.  Although all of the employment reports show so many more people getting jobs, there is very little reported in the news about how a large number of Millennials continue to remain underemployed.  Yes, they may have jobs, but the combination of not earning enough money to purchase a home, along with the overall generation’s lack of desire to own a home, is putting some downward pressure on new construction.

The big headline in housing was that housing permits surged 11.0 percent in November.  I am not a naysayer but so many industry newsletters reported this incredible increase.  However only if you dug into the numbers just a little bit you would have learned that the Multi-family component of the index soared 27 percent and the single family portion rose only 1.1 percent.  This once again shows the lack of first time buyers is keeping the single family market from any type of rapid growth and confirms that more people, especially the Millennial’s, are focused on renting rather than purchasing.

Mortgage applications for the week ending December 11th showed little change.  According to the Mortgage Bankers Association of American purchase applications declined 3.0 percent and refinances ticked upward by 1.0 percent.  The good news is that mortgage rates continue to remain low and that the Fed increase on Wednesday had virtually no impact on mortgage rates.

All of next week’s potential market moving reports are:

·        Tuesday December 22nd – GDP & Existing Home Sales
·        Wednesday December 23rd - MBA Applications, Durable Goods Orders, New Home Sales
·        Thursday December 24th - Jobless Claims
·        Friday December 25th – Markets Closed

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070

Monday, December 14, 2015

Housing And Jobs Reasons To Be Thankful



Home prices and job creations were on the up and up earlier this season.

Home Prices Sparkle and Shine
In housing news, year-over-year home price gains continued to shine, according to CoreLogic, a leading provider of consumer, financial and property information. Home prices, including distressed sales, rose 6.4 percent in September 2015 compared to September 2014. This followed a sparkling August 2014 to August 2015 increase that also was well above 6 percent. CoreLogic forecasts prices will continue to rise through this time next year, although the percent increase is not expected to be quite as high.

Jobs Creation Rebounds
The October Jobs Report shined with 271,000 jobs created, well above expectations. The unemployment rate also dropped to 5 percent.

After a disappointing September Jobs Report and other mixed economic data, the Fed had left the benchmark Federal Funds Rate unchanged at its September and October meetings. However, if strong employment numbers continue, that may be just what the Fed needs to take action at its meeting later this month.

Why is this important to homebuyers? The Fed Funds Rate is the rate banks use when lending money to each other overnight. When the Fed does increase the Fed Funds Rate, it's possible home loan and other consumer rates may rise as well, depending on the markets and other economic conditions.

The Fed will continue to monitor employment trends and other economic data over the next few weeks to watch for signals of a strengthening economy.

For now, home loan rates are still in attractive territory. If you have any questions about housing and home loans, please don't hesitate to contact me. Enjoy this month's issue of YOU Magazine.

Friday, December 11, 2015

No Significant Market Moving News



The week did not have much in the way of significant market moving news however the stock market, which was mostly on the down side for the week, moved north on Thursday to bring some relief for investors.  The market has been reacting to global concerns and an economic slowdown in China.

Consumers are loving the fact that gas prices are dropping almost daily.  Oil is under $37.00 a barrel and gas is the lowest we have seen in many years.  There is a glut of oil available throughout the globe as demand is down.  Here in the U.S., despite the low gas prices, consumers seem to be pocketing the savings rather than spending it.

First time jobless claims rose for the first time in weeks up to 282,000.  This is an increase of 13,000 from the prior week and could possibly point to a softening in the labor market.  One week is not enough to make a judgement on a labor trend but it is worth keeping an eye on in the coming weeks.  We are entering holiday time so the real indicators of what is happening in the labor force will be seen in January.

The Mortgage Bankers Association of America reported that applications for purchase loans ending for the week of December 4thwere essentially flat.  Refinances increased 4.0 percent from the prior week.  Compared to last year purchase applications are up a whopping 29.0 percent.  There continues to be a shortage of inventory which is keeping sales from being even higher than they currently are.

Mortgage rates continue to remain within a narrow range day to day.  The recent increase in mortgage rates appears to be more due to the fact that reality has set in that the Fed is going to raise rates next week and bond traders and investors are already factoring in the increase.

In a recent interview Zillow’s Chief Economist Svenja Gudell stated that 2016 should be a great year for purchasing a home.  There were a few reasons given for the anticipated improvement in the housing market.

One reason is that home price appreciation is anticipated to level off at around 3.5 %.  This could give buyers who have been stuck behind the rising prices a chance to get in to the market.  It is also expected that more homes will hit the market once homeowners realize that waiting to sell will likely not put much more money in their pockets.

Although next week’s economic reports include a return to housing, the biggest and most anticipated news for next week will be the Fed decision on interest rates.  It is highly likely that the Fed will raise rates by ¼%.  This will be the first rate hike for the Fed in about 10 years.

All of next week’s potential market moving reports are:

·        Tuesday December 15th – Consumer Price Index & Housing Market Index
·        Wednesday December 16th - MBA Applications, Housing Starts, FOMC Announcement
·        Thursday December 17th - Jobless Claims

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Tuesday, December 8, 2015

Merriment on Main



Getting ready for the 2015 "Merriment on Main" celebration in downtown Vacaville, CA

Saturday, December 5, 2015

A Flat Trend In Sales


The National Association of Realtors reported that pending home sales has been softer than expected.  For the month of October sales rose only 0.2 percent.  From the same time last year sales are up 3.9 percent which continues to indicate a somewhat flat trend in this sector of the market.

The Northeast led the country with  an increase of 4.5 percent.  The year-on-year increase is 6.8 percent. The West followed the Northeast with a rise in pending sales of 1.7 percent.  The highlight from this region is that sales are up 10.4 percent from the same time last year.

Low supply continues to be the reason for lackluster growth in pending home sales.  The shortage of inventory is putting significant upward pressure on home prices in some markets which is beginning to price first time homebuyers out of the market.

The Mortgage Bankers Association of American reported that applications for purchase loans moved sharply higher by 8.0 percent for the week ending November 27th.   Applications are up a staggering 30 percent from the same time last year.  It appears that buyers are finally acknowledging that mortgage rates are likely to rise and they are locking in their interest rates before the Fed increases rates at their Fed policy meeting in December.  Although it is not guaranteed the Fed will raise rates, all indications are that the Fed will bump up rates for the first time in almost 10 years.

First time jobless claims continue to remain low and at what is considered very healthy levels.  Claims for the week ending November 28th were reported at 269,000.  This is an increase of 9,000 from the prior week but still far below what is considered the line for concern of 300k.

On Wednesday the ADP Employment Report, which projects what the labor department will report for employment on Friday, will be stronger than most analysts expect.  The consensus for the ADP report was for job data to show 183,000 jobs were added to the economy last month.  The ADP report states their estimate at a 217,000 jump in employment which far exceeds expert predictions.

The November report on employment was released on Friday morning at 8:30AM.  The latest labor department report shows that the economy added 211,000 jobs which is 21,000 more than expected and just shy of the ADP report.   The national unemployment rate remained the same at 5.0 percent.  The hourly wage rate increase 0.2 percent which was in line with expectations.

Today’s report is believed to virtually assure that the Fed will raise interest rates at the FOMC meeting taking place in a week and half.

Next week’s potential market moving reports are:

·        Tuesday December 8th – Labor Department’s Job Openings and Labor Turnover Survey
·        Wednesday December 9th - MBA Applications
·        Thursday December 10th - Jobless Claims
·        Friday December 11th – Retail Sales & Producer Price Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, December 2, 2015

Home Equity 101


Want to pay off high-interest debt in one fell swoop? Searching for ways to pay for a basement renovation, a bathroom upgrade, or a new tile roof? Since you probably don't have that kind of money stuffed under your mattress, a natural place to look for more funds is in your single biggest asset: your home.
But before you tap into those funds, you need to know exactly what you're getting into. Putting your home at risk isn't for the uninformed or undisciplined.